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February 15, 2012

Mounting Iran-West tensions have implications for India's energy security, transit to Afghanistan, the India-US "strategic relationship", India's ties with the Gulf countries as well as its international role as a rising power.

Iran is India's second largest oil supplier after Saudi Arabia, providing about 12% of its annual requirments worth about $12 billion. India can potentially obtain pipeline gas or LNG from Iran if security and sanctions issues can be overcome. Iran's geographically proximity makes it a logical source of hydrocarbons for energy deficient India which today imports 70% of its needs and will import 90% in the years ahead.

INTERESTS

Competition with China in the Gulf region makes the task of securing our energy requirements even more daunting. China's Security Council membership and financial clout give it more leverage than we have with Iran as well as the US. It can more easily enter into barter arrangements as it exports much more than us to Iran. Looking ahead, India must not lose ground in Iran irretrievably to China.

India is unable to gain access to Afghanistan through Pakistan and Iran, therefore, is a logical alternative. India built the Zaranj-Delaram road segment in Afghanistan to complete a road link between Chabahar port in Iran to Kabul. Iran, unfortunately, has not given sufficient priority to this strategic project. Now, with tightened sanctions, external investments have become more problematic. The Chabahar route has become even more important for India in view of its planned investments in the Hajigak iron ore project in Afghanistan.

India's strategic interest in maintaining productive ties with Iran conflicts with US's strategic interest in toppling its clerical regime. India's political and economic interests in Iran are transparent, whether in terms of energy security, access to Afganistan, countering a Taliban take over of Afghanistan backed by Pakistan, leveraging contradictions in Iran-Pakistan relations, maintaining a balanced posture on the Iran-Saudi Arabia and Shia-Sunni divide wracking West Asia etc. India has no hidden Indian agenda of encouraging Iran to defy the West or bolstering its capacity to do so.

India is against Iran going nuclear. While recognizing its right to peaceful uses of nuclear energy, India has asked Iran to clarify IAEA queries about its nuclear activities. India is mindful of the consequences of Iran going nuclear for the Gulf region where it has vast energy, trade, manpower and remittance interests, but the US should not expect India to share its apocalyptic view of Iran's nuclear ambitions. India, which has itself long suffered US nuclear sanctions, lives with a much more direct threat to its security from Pakistan's nuclear capability developed with Chinese support and US indulgence. Even now Pakistan's conduct in nurturing and supporting jihadi groups against India and Afghanistan under cover of its nuclear capability escapes sanctions. Instead, engaging Pakistan is advocated, but with Iran the approach is coercive.

US

A strategic partnership has to be two-way. If India is to take cognizance of US strategic concerns, the US should accommodate India's concerns too. If Pakistan is not a black and white case for the US and its policy towards the former has to take into account its larger regional interests, Iran is not a black and white case for India either and its Iranian policy too has to be adapted to its broader regional interests.

The US should therefore take cognizance of India's legitimate equities in Iran that transcend the current US-Iran tensions that are in part Israel-spurred and domestically driven. Building congruence in policies on complex issues such as Iran has to begin at both ends and not with one side expected to align itself with the policy prescriptions of the other. The US should not put serious constraints on India's oil purchases from Iran. The answer to Iran's nuclear defiance does not lie in undermining India's energy security and its broader regional interests.

That India can obtain additional oil supplies from Saudi Arabia to compensate for loss of Iranian supplies is no reason to politically endorse contestable policies. India has very productive relations with Saudi Arabia and other Gulf monarchies which it should preserve, but with its own large Muslim population composed of Sunnis and Shias, it should maintain a balance between its equities in the Arab world and Iran and avoid getting caught in the sectarian politics of West Asia.

India is often faulted by foreign and domestic critics for unwillingness to accept global responsibilities that come with an enhanced international status. These jibes are made when India resists siding with the US/West on Iran, Libya, Syria and, until now, on Myanmar. India's rising global role should not require it to give up independence of judgment or always endorse western policies. Assuming responsibilty at the global level should mean supporting or opposing policies in the interest of an equitable functioning of the international system.

It is not Iran earnings from sale of oil to India that will determine its nuclear decisions. Iran's political judgment on the advantages and disadvantages of going nuclear would be the key factor. On the face of it Iran is being pushed to the limit by western policies of economic warfare and miltary intimidation to go nuclear. When will it look for nuclear protection against regime change?

The government has shown political grit in resisting US pressure on Iran. The Finance Minister has expressed India's inability to drastically reduce its oil supplies from Iran. The government has reached an understanding with Iran on making 45% of the oil payments in rupees to be used for goods and project exports from India. This could impart more economic substance to the India-Iran relationship. India is playing its difficult hand as well as it can.

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